Variant Investments, LLC (the “Firm”), as a matter of policy and practice, and consistent with industry best practices and SEC requirements (SEC Rule 204A-1 under the Advisers Act and Rule 17j-1 under the Investment Company Act, which is applicable if the firm acts as investment adviser to a registered investment company), has adopted a written Code of Ethics covering all supervised persons. Our firm’s Code of Ethics requires high standards of business conduct, compliance with federal securities laws, reporting and recordkeeping of personal securities transactions and holdings, reviews and sanctions.
1. Definitions of Terms Used
2. Compliance with Laws and Regulations
The Firm and each Supervised Person must comply with all applicable Federal Securities Laws, whether acting with respect to client accounts, personal accounts or Proprietary Accounts. Without limiting the generality of the foregoing, Supervised Persons of the Firm shall not, directly or indirectly, in connection with the purchase or sale of a security held or to be acquired by a client account, personal account or Proprietary Account:
3. Preferential Treatment, Gifts and Entertainment
No Supervised Person of the Firm shall seek or accept favors, preferential treatment or any other personal benefit because of his or her association with the Firm, except those usual and normal benefits directly provided by the Firm.
No Supervised Person of the Firm shall accept or offer any entertainment, gift or other personal benefit that may create or appears to create a conflict between the interests of such person and the Firm. Supervised Persons are prohibited from receiving any gift or other personal benefit of more than de minimis value (see Exhibit A for definition of de minimis) from any person or entity that does business with or on behalf of the Firm. In addition, Supervised Persons are prohibited from giving or offering any gift or other personal benefit of more than a de minimis value to any person or entity who is an existing or prospective client or any person that does business with or on behalf of the Firm and shall be absolutely prohibited from giving or offering any gift or other personal benefit to any client or prospective client that is a governmental entity or official thereof or official of any governmental entity investment, retirement or pension fund. For purposes of this Code, de minimis is defined as reasonable and customary business entertainment, such as an occasional dinner, a ticket to a sporting event or the theater, or comparable entertainment which is neither so frequent nor so extensive as to raise any question of propriety. Supervised Persons shall comply with the Gift and Entertainment Procedures attached hereto as Exhibit A. Any questions regarding the receipt of any gift or other personal benefit should be directed to the Compliance Officer.
4. Conflicts of Interest
If any Supervised Person of the Firm is aware of a personal interest that is, or might be, in conflict with the interest of any client, that Supervised Person should disclose the situation or transaction and the nature of the conflict to the Firm’s Compliance Officer for appropriate consideration. In addition, no Supervised Person of the Firm may use knowledge about pending or currently considered securities transactions for clients to directly or indirectly profit personally. Without limiting the foregoing, Supervised Persons of the Firm who are planning to invest in or make a recommendation to invest in a Contemplated Security, and who have a material interest in the security or a related security, must first disclose such interest to his or her manager and the Compliance Officer. Such manager or Compliance Officer shall conduct an independent review of the recommendation to purchase the security for clients and written evidence of such review shall be maintained by the Compliance Officer. Supervised Persons may not fail to timely recommend a suitable security to, or purchase or sell a suitable security for, a client in order to avoid an actual or apparent conflict with a personal transaction in a security.
5. Service as a Director
Supervised Persons of the Firm (other than a Non-Employee Committee Member) are prohibited from accepting any new appointment to the boards of directors of any company (other than charitable foundations and not-for-profit institutions that are not clients of the Firm), whether or not its securities are publicly traded, absent prior authorization of the Firm’s Compliance Officer. In determining whether to authorize such appointment, the Compliance Officer shall consider whether the board service would be adverse to the interests of the Firm’s clients, would interfere with or hinder the Firm’s ability to provide recommendations to its clients, and whether adequate procedures exist to ensure isolation from those making investment decisions. No Supervised Person may participate in a decision to purchase or sell a security of any company for which he/she serves as a director. All Supervised Persons shall report existing board positions with for-profit corporations, business trusts or similar entities within ten (10) days of becoming a Supervised Person. All Supervised Persons must notify the Compliance Officer within ten (10) days of accepting a new appointment to serve on the board of directors of any for-profit corporation, business trust or similar entity (other than energy companies, for which prior authorization of the Compliance Officer is required).
6. Inside Information
U.S. securities laws and regulations, and certain foreign laws, prohibit the misuse of “inside” or “material non-public” information when trading or recommending securities. In addition, Regulation FD prohibits certain selective disclosure of information to analysts.
Information is generally deemed “material” if a reasonable investor would consider it important in deciding whether to purchase or sell a company’s securities, or if it is information that is reasonably certain to affect the market price of the company’s securities, regardless of whether the information is directly related to the company’s business. Information is considered “nonpublic” when it has not been effectively disseminated to the marketplace. Information is “public” after it has been disseminated broadly to investors in the marketplace. For example, information is public after it has become available to the general public through the Internet, a public filing with the SEC or some other government agency, the Dow Jones “tape” or The Wall Street Journal or some other publication of general circulation, and after sufficient time has passed so that the information has been disseminated widely.
Inside information obtained by any Supervised Person of the Firm from any source must be kept strictly confidential. All inside information should be kept secure, and access to files and computer files containing such information should be restricted. The Firm prohibits all Supervised Persons of the Firm, either personally or on behalf of client accounts or Proprietary Accounts of the Firm, from trading while in possession of material non-public information, misappropriating material non-public information or disclosing material non-public information to others in violation of applicable law or these policies and procedures. Questions and requests for assistance regarding insider information should be promptly directed to the Firm’s Compliance Officer.
Inside information may include, but is not limited to, knowledge of pending orders or research recommendations, corporate finance activity, mergers or acquisitions, advance earnings information, clients’ securities holdings and transactions, and other material non-public information that could affect the price of a security. Inside information or material non-public information does not include legally obtained information concerning non-public entities that have no publicly traded securities, where access to such information is necessary to conduct due diligence on instruments considered for investment in client accounts.
A client’s identity, financial circumstances and account information is also confidential and must not be discussed with any individual whose responsibilities do not require knowledge of such information.
7. Restrictions on Personal Securities Transactions
8. Preclearance of Personal Securities Transactions
9. Excluded Transactions
The trading restrictions in Section 7 and the preclearance requirements of Section 8 do not apply to the following types of transactions:
10. Reporting Procedures for Personal Securities Transactions
Access Persons of the Firm shall submit to the Firm’s Compliance Officer the reports set forth below. Any report required to be filed shall not be construed as an admission by the Access Person making such report that he/she has any direct or indirect beneficial interest in the security to which the report relates.
(i) with respect to any transaction in the quarter in a Reportable Security in which the Access Person had, or as a result of the transaction acquired, any direct or indirect beneficial ownership:
acquisition or disposition);
transaction was effected; and
(ii) with respect to any account established by the Access Person in which any securities were held during the quarter for the direct or indirect benefit of the Access Person:
established the account;
11. Administration of Code
The Compliance Officer of the Firm shall be responsible for all aspects of administering this Code and for all interpretative issues arising under the Code as they relate to the Firm. The Firm’s Compliance Officer is responsible for considering any requests for exceptions to, or exemptions from, the Code (e.g., due to personal financial hardship) as it relates to Access Persons of the Firm. Any exceptions to, or exemptions from, the Code shall be subject to such additional procedures, reviews and reporting as may be deemed appropriate by the Compliance Officer, and shall be reported to the board of directors at the next regular meeting. The Firm’s Compliance Officer will take whatever action he or she deems necessary with respect to any officer, member of the board of directors or employee of the Firm who violates any provision of this Code.
12. Reports to Board
At least once a year, the Compliance Officer shall review the adequacy of the Code and the effectiveness of its implementation. In addition, no less frequently than annually, the investment adviser to a Reportable Fund must provide a written report to the Board of Directors of such Reportable Fund that describes any issues arising under the Code since the last report to the Board of Directors, including, but not limited to, information about material violations of the Code or procedures and sanctions imposed in response to the material violations. The report will also certify to the Board of Directors that the investment adviser has adopted procedures reasonably necessary to prevent Access Persons from violating the Code. The report should also include significant conflicts of interest that arose involving the Firm’s personal investment policies, even if the conflicts have not resulted in a violation of the Code. For example, the Firm will report to the Board if a portfolio manager is a director of a company whose securities are held by the Reportable Fund.
13. Code Revisions
Any material changes to the Code will be submitted to the Board of Directors of any Reportable Fund for which the Firm serves as investment adviser for approval within six months of such change.
14. Recordkeeping Requirements
The Firm shall maintain records, at its principal place of business, of the following: a copy of each Code in effect during the past five years; a record of any violation of the Code and any action taken as a result of the violation for at least five years after the end of the fiscal year in which the violation occurs; a record of all written acknowledgments of receipt of the Code, and all amendments thereto, for each person who currently is, or within the past five years was, a Supervised Person of the Firm; a copy of each report made by Access Persons of the Firm as required in this Code, including any information provided in place of the reports for at least five years after the end of the fiscal year in which the report is made or the information is provided; a record of all persons required to make reports currently and during the past five years; a record of all who are or were responsible for reviewing these reports during the past five years; for at least five years after the fiscal year in which the report is made, the report required under Section 12 above; for at least five years after the end of the fiscal year in which approval is granted, a record of any decision and the reasons supporting that decision, to approve an Access Person’s purchase of securities in an Initial Public Offering or a Limited Offering; and a copy of reports provided to the management committee of the Firm regarding the Code.
15. Condition of Employment or Service
All Supervised Persons shall conduct themselves at all times in the best interests of the Firm. Compliance with the Code shall be a condition of employment or continued affiliation with the Firm. All Supervised Persons shall promptly report to the Compliance Officer all apparent violations of the Code of Ethics. Any retaliation for the reporting of a violation under this Code will constitute a violation of the Code. The Compliance Officer will consider reports made to the Compliance Officer hereunder and will determine whether or not the Code has been violated and what sanctions, if any, should be imposed. Conduct not in accordance with the Code shall constitute grounds for actions which may include, but are not limited to, a reprimand, a restriction on activities, unwinding a trade or disgorgement of profits obtained in connection with a violation, the imposition of fines, termination of employment or removal from office, or referral to civil or criminal authorities. All Supervised Persons shall certify upon becoming a Supervised Person, and thereafter annually, that they have received a copy of and read the Code, and all amendments thereto, and agree to comply in all respects with this Code and that they have disclosed or reported all personal securities transactions, holdings and accounts required to be disclosed or reported by this Code.
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Gifts and Entertainment Procedures
The Code of Ethics for the Firm contains provisions prohibiting the giving, offering or acceptance of gifts, entertainment or other personal benefit of more than de minimis value to any person or entity who is an existing or prospective client of the Firm or to or from any person or entity that does business with or on behalf of the Firm or any registered investment company managed by the Firm (each a “Fund” and collectively, the “Funds”). The following sets forth procedures to be followed in connection with the giving, offering and acceptance of any gifts, entertainment or other personal benefit.
Occasionally an Access Person (as defined in the Code of Ethics) of the Firm may be offered gifts or entertainment opportunities by clients, brokers, vendors or other organizations with whom the Firm or the Funds conduct business. The Firm must comply with regulatory requirements that limit or restrict the giving or receiving of gifts and/or entertainment. Access Persons of the Firm have a duty to ensure that their actions are free from any conflict with the interests of the Firm’s clients. The giving or receiving of any gift or entertainment must be consistent with good business practice, could not be construed as a bribe or corrupt the judgment of the recipient, does not obligate the recipient in any way and would not embarrass the Firm or the Funds. Whether activity is excessive will be made on a case-by-case basis by the Firm’s Compliance Department in consultation with outside counsel if needed. As professionals, you are expected to use your best judgment in evaluating whether the frequency or magnitude of any activity is improper.
Accepting Gifts. The only gift that an Access Person of the Firm may accept from a third party that does business with or on behalf of the Firm or any of the Funds managed by the Firm, is a gift of de minimis value, promotional items (e.g., pens, mugs, t-shirts and other logo bearing items), and commemorative gifts relating to business transactions (e.g., such as Lucite tombstones). For purposes of these procedures, de minimis value is considered to be no more than $100 annually (calendar year basis). Under no circumstances may an Access Person accept a gift of cash, including a cash equivalent such as a gift certificate, bond, security or other items that may be readily converted to cash.
If an Access Person receives a gift that is prohibited under the Code of Ethics and these procedures, it must be declined or returned in order to protect the reputation and integrity of the Firm. If the gift has already been received and cannot be returned, it will be donated to a charity chosen by the Firm’s Board of Directors. Any question as to the appropriateness of any gift should be directed to the Firm’s Chief Compliance Officer.
Giving Gifts. In appropriate circumstances, it may be acceptable for the Firm or its Access Persons to extend gifts to clients or others who do business with the Firm. Gifts of cash (including cash equivalents such as gift certificates, bonds, securities or other items that may be readily converted to cash) or excessive or extravagant gifts, as measured by the total value or quantity of the gift(s), are prohibited. Gifts with a face value in excess of $100 must be cleared by the Firm’s Chief Compliance Officer. Promotional items will not count toward the $100 limit.
An Access Person should be certain that the gift does not give rise to a conflict with client interests, or the appearance of a conflict, and that there is no reason to believe that the gift violates any applicable code of conduct of the recipient. Gifts are permitted only when made in accordance with applicable laws and regulations and generally accepted business practices.
The Firm recognizes that occasional participation in entertainment opportunities with representatives from organizations with whom the firm transacts business, such as clients, brokers, vendors or other organizations can be useful relationship building exercises. Examples of such entertainment opportunities are: lunches, dinners, cocktail parties, golf outings or regular season sporting events. Accordingly, occasional participation by an Access Person in such entertainment opportunities for legitimate business purposes is permitted, provided that the value of the meal or other entertainment item is $250 or less per person, with a limit of $1,000 annually (calendar year basis) per person. An Access Person of the Firm is required to obtain prior approval from the Firm’s Chief Compliance Officer before accepting any other entertainment opportunity. The Firm’s Chief Compliance Officer must clear his or her own participation in the above situations with a Director of the Firm. Meals provided in the Firm’s office, a client’s office or in a similar business setting shall not be deemed entertainment and the Firm does not require Access Persons to report these activities.
Lodging. An Access Person is not permitted to accept a gift of lodging in connection with any entertainment opportunity. Rather, an Access Person must pay for his/her own lodging expense in connection with any entertainment opportunity. If an Access Person participates in an entertainment opportunity for which lodging is arranged and paid for by the host, the Access Person must reimburse the host for the equivalent cost of the lodging. It is the Access Person’s responsibility to ensure that the host accepts the reimbursement and whenever possible, arrange for reimbursement prior to attending the entertainment event. Lodging connected to an Access Person’s business travel will be paid for by the Firm, or as applicable, the Funds.
Car and Limousine Services. An Access Person must exercise reasonable judgment with respect to accepting rides in limousines and with car services. Except where circumstances warrant (e.g., where safety is a concern), an Access Person is discouraged from accepting limousine and car services paid for by a host when the host is not present.
Air Travel. An Access Person is not permitted to accept a gift of air travel in connection with any entertainment opportunity. Rather, an Access Person must pay for his/her own air travel expense in connection with any entertainment opportunity. If an Access Person participates in an entertainment opportunity for which air travel is arranged and paid for by the host, the Access Person must reimburse the host for the equivalent cost of the air travel. It is the Access Person’s responsibility to ensure that the host accepts the reimbursement and whenever possible, arrange for reimbursement prior to attending the entertainment event. Air travel that is connected to an Access Person’s business travel will be paid for by the Firm, or as applicable, the Funds.
Reporting. All gifts and entertainment of any amount given or received are required to be reported by the Access Person to the Firm’s Chief Compliance Officer.
Quarterly Certification. On a quarterly basis, every Access Person will be required to certify their compliance with these procedures.
Any questions as to the appropriateness of gifts, travel and entertainment opportunities should be discussed with the Chief Compliance Officer.
Publicly Traded Contemplated Securities
Any security that matches the following securities type is considered a Publicly Traded Contemplated Security by the Firm.
Access persons must submit holdings and transaction reports for “reportable securities” in which the Access person has, or acquires, any direct or indirect beneficial ownership. An Access person is presumed to be a beneficial owner of securities that are held by his or her immediate family members sharing the Access person’s household.
Rule 204A-1 treats all securities as reportable securities, with five exceptions designed to exclude securities that appear to present little opportunity for the type of improper trading that the Access person reports are designed to uncover:
The rule thus requires Access persons to report shares of mutual funds advised by the Access person’s employer or an affiliate and is designed to help advisers (and our examiners) identify abusive trading by personnel with Access to information about a mutual fund’s portfolio.